Suspension of mining services
On July 20th HashFlare has officially announced the suspension of existing SHA-256 mining contracts. The decision was reached due to the fact that at that moment, our users have been facing the situation where payouts were lower than maintenance fees. As a result, after the maintenance fee was deducted, accruals to the balance equaled zero and the service had to work to its own detriment in order to keep users’ balances from going negative.
The announcement of this decision was immediately met with backlash and mixed public reaction — including ones of such major and well-known crypto-publishers as Cointelegraph and Forklog and tens of lesser news aggregators. At the same time, multiple phishing sites, public channels and chats on social media took advantage of the clamour around HashFlare and passed themselves off as HashFlare’s new projects or impersonated official channels — some of them even demanded money from credulous users in order to regain access to mining.
Unfortunately, a number of articles from fairly trusted sources were based on false information gathered from fraudulent websites and social media groups. To even greater disappointment, a vast number of users turned out to be gullible enough to rise to the bait of fraudsters who pretended to be associated with HashFlare.
In light of this we would like to once again draw your attention to the fact that apart from newsletters that our users have received on July 20th and 27th (as well as messages on our official Facebook, Twitter and Telegram channels) — this article is the first official statement and commentary from HashFlare regarding the situation that occured with the service at the end of July.
Resumption of mining services
The resumption of SHA-256 contract mining services occured on July 27th, one week after the news about its temporary suspension. Throughout that week our entire team was focused on process optimization and on finding an optimal solution which would allow us to resume mining. The most crucial fact was that we have managed to reach a new agreement with our hashrate suppliers during that week.
In order to put an end to speculations on whether HashFlare does or does not have any hashpower that is able to cover all of our clients’ needs, we would like to once again explain how our service is structured. As hashpower suppliers, we have three options, which we do not hold secret:
Build our own data centers from the ground up — from the foundation of the facility to the final screw in the final miner.
Rent a facility suitable for our equipment and shift the supply of electricity onto our lessor (and sometimes, if the facilities are located far away, also burden the lessor with maintenance of our hardware).
Rent large quantities of hashpower from other suppliers ourselves, thousands of miners at a time.
Currently our main partners and suppliers of hashpower for mining are such famous brands like HashCoins OÜ, Bitmain, Bitfury, as well as a number of other suppliers from around the world. At the moment we mainly use BitFury B8, Antminer S7 and S9 for mining, as well as the equipment assembled by our suppliers.
As the majority of hashpower is supplied by our partners, we cannot directly influence the electricity price. The conditions that we offer our clients are mirror images of the conditions imposed by our suppliers and partners.
Consequently, as soon as mining became unprofitable, we found ourselves in the same situation as our clients.
To avoid jeopardizing our clients’ contracts, we decided to take a break and review the conditions of the service with our suppliers. As soon as we have reached an agreement which allowed us to resume the operation of our equipment, we have restored the mining service of SHA-256 contracts, which occured on 27.07.2018.
Since then, HashFlare has been operating on the same conditions without any changes to the contracts. Nevertheless, we constantly encounter questions from our users regarding mining, payouts and contract duration. In order to shed light on the performance of the service in the current mining market conditions, we have decided to gather the most frequent questions in one place and provide detailed answers.
Answers to frequently asked questions
Have you terminated my SHA-256 contract?
No. As stated in HashFlare’s official newsletter, we have temporarily suspended the operation of the mining equipment for SHA-256 contracts and restored it on July 27th. All contracts remained active and function on the same terms.
- If you have shut the equipment off, why didn’t it affect the global network capacity?
If you open any mining calculator, you would see that over the course of a single day the mining factors vary frequently and usually quite severely. Compared to other major market players, whose actions might significantly change the total hashrate in the Bitcoin network, we are not that big of a company that the shutdown of our equipment would lead to a noticeable decrease in the network’s total hashpower.
- If you have resumed mining, why haven’t there been any payouts to the balance yet?
With the current BTC price and difficulty, mining still remains unprofitable. Since HashFlare has undertaken to sustain contracts over the course of one year, while mining remains unprofitable — all of the burdens and covering of losses rests on our service. You will begin receiving payouts to your balance as soon as mining becomes profitable again. More information on what influences mining profitability can be found in the following article.
- Your commission is eating up my entire revenue, why is it always different?
When the service was launched in 2015, Maintenance Fee for SHA-256 contracts was $0.01 per 10 GH/s and since then has only been decreasing. At the moment, HashFlare’s commission is fixed and you were able to familiarize yourself with it on our website when purchasing a contract. Right now, SHA-256 contracts are subject to a commission of $0.0035 per every
10 GH/s, which are deducted once every 24 hours — a rate which remained unchanged since February 2017.
As we operate in a world where most countries still use fiat currencies, we cannot pay the electricity bills in bitcoin and the company bears the expenses in USD.
For your convenience, the system automatically converts the USD amounts into BTC (as the balance on your panel is in BTC), which gets deducted from your revenue. Due to everyday fluctuations in the BTC/USD exchange rate, that sum in BTC is always different, while remaining constant is USD, which you can verify yourself by carrying out some simple calculations using a currency converter.
The more profitable mining is, the less the commission becomes in relation to the daily amount mined and vice versa.
- I don’t need any mining anymore, I just want to withdraw my funds!
We are not retaining your funds in any way — you can withdraw the mined amounts from your balance at any time after passing the verification procedure, in accordance with the new KYC requirements, aimed to comply with current laws and regulations.
At the time being, daily withdrawal limit for verified users is set to 0.01 BTC. The high limit of 0.05 BTC, which was set at the beginning of the year, was related to the limits in the processing capacity of our BTC payment gateway used for withdrawals, but by May of this year, the limit was lowered to 0.03 BTC and at the moment, you do not need to have that high amount on your balance in order to withdraw your funds.
In order to withdraw a minimum amount of 0.01 BTC and more, passing the first level of verification would suffice, for which you need to fill out the fields in your Profile, without the need of providing any documents that verify your identity.
You only need to send us identification documents if you wish to increase the withdrawal limits and complete the second identity verification level. Do note, that at the moment the queue for second level verification is measured in tens of thousands — so it is natural that those of our users that submitted their documents within the first few days, have passed verification within 24 hours. Those that have submitted their documents later, have to wait for verification a little longer, but we assure you, that all users will be verified, as long as their documents meet all of the requirements.
In order to expedite the process, please send us relevant high-quality photos of your documents — you can read about the requirements in detail here. Remember that the information in the documents must not contradict the information you have filled out on your profile in order to reach verification level 1.
- You are not providing the services that I have paid for!
Please note, that according to the contract, you have purchased hashrate (hashpower) for mining cryptocurrency over a specific period, not the cryptocurrency itself. Our service continues to operate; therefore, the hashrate is still provided to you in full, in accordance with your contract and cryptocurrency continues to be mined (at the time of writing this article — in the conditions of mining unprofitability).
Thus, in accordance with the concluded contract, which at the time of purchase presented you with a certain amount of hashpower over a certain period, HashFlare continues to provide its services to you in full.
To conclude, we would once again like to draw your attention to the fact that fluctuations in the cryptocurrency market and constantly changing situation surrounding mining is a normal and natural phenomenon. Despite that currently the market situation might seem alarming, the experience of the past years shows that periods of significant drops are often followed by significant growth.
From our side, we are doing everything we can in order to optimize mining profitability in the current conditions and would like to thank all of our users for their support to HashFlare, which remains as of the most trustworthy cryptocurrency mining services.